Daedong achieved KRW 356.8 billion in sales in the first quarter, making a 20% growth compared to last year
- The overseas sales in the first quarter of KRW 168.4 billion, an increase of 37.5% year-on-year. Good domestic sales performance despite the reduced market size
- Profitability is forecasted to improve in the second quarter, resulting from increased sales price in the overseas market, improved cost competitiveness, and reduced shipping cost
- Growth in sales of finished products, parts, and services with Daedong's brand attaining higher market power to maximize profit
Daedong continues to grow steadily by increasing domestic and overseas market power, racking up a record-high quarterly performance.
The leading company in future agriculture, Daedong (CEO Kim Joon-Shik Kim and Yoo-Hyun Won), announced on the 16th that it has reached KRW 356.8 billion consolidated sales, making an increase of 20% year-on-year. It outran the KRW 338 billion sales of the 2021 Q2, the busiest season of the year, making a record-breaking quarterly sales since its foundation.
Total sales in the overseas market and domestic market have reached KRW 231.6 billion and KRW 125.2 billion, respectively. Overseas sales rose by 37.5% from the KRW 168.4 billion sales in the same period last year. Overseas and domestic sales in 2021 Q1 occupied 56% and 44% respectively. This year, the increase in exports pushed the share of overseas sales up to 65%. The domestic sales decreased by 2.7% year-on-year, but considering the 8.9% decrease of the domestic tractor market size (based on Nonghyup financial loans) in the first quarter of this year, the sales performance is still remarkable.
Due to the rise in distribution costs caused by the four-fold increase in ocean freight compared to the first quarter of last year, increased raw materials cost caused by the global supply chain crisis, and the reorganization of management systems with the implementation of the ERP system, the operating profit in the first quarter this year recorded KRW 21.6 billion. Profitability has decreased temporarily because the rise in raw materials cost could not be reflected in the selling price of products ordered by overseas dealers last year-a decision made by Daedong to protect market competitiveness and business relationship. Still, performance in the second quarter shows positive signs. On April 1, Daedong raised the selling prices in over 70 countries of export, including North America and Europe, and the cost competitiveness is gaining an edge through the innovation in the quality and the diversification of the supply chain as a result of the "Global Quality Innovation TFT" that began operation last year. On top of that, the ocean freight cost started to flatten out, altogether forecasting an increase in profits.
Unlike other companies, Daedong maximizes its profits not only from finished products but also parts/services by increasing supplies through its brand in the mid-term and long-term and continuously strengthening market dominance. In North America, the retail sales of tractors and utility vehicles by its export brand, Kioti, showed an average annual growth of 28% over the past three years. In line with this, the market share rose close to 8% from slightly over 6% in the first quarter of last year. Daedong established a parts supply chain and implemented a global-standard production and quality control system for an annual production of 50,000 tractors in order to expand its export. Also, with the Global Business Development (GBD) Division that was newly established last year, Daedong is developing strategies to venture into the fields of agricultural machinery and mobility. In terms of the domestic market, Daedong will increase its market dominance by providing differentiated customer and product services. Furthermore, "Daedong Connect," the remote-control service for agricultural machinery, will be first introduced with enhanced features that can cover light and medium tractors in the second quarter to expedite the platform business for future agriculture.